Endless Solar Corporation Limited v Australian Securities and Investments Commission, in the matter of Speedpanel Australia Ltd

Counsel for the Applicant: O Bigos KC with P E Annabel

Solicitor for the Applicant: Altus Lawyers

Counsel for PricewaterhouseCoopers: E A Bennett with L Freckelton

Counsel for KCL Law and Jeremy Goldman: A J Purton

Solicitor for KCL Law and Jeremy Goldman: Corrs Chambers Westgarth

Counsel for Peter Bernhardt: R A Kornhauser

Solicitor for Peter Bernhardt: Madgwicks Lawyers

ORDERS NSD 172 of 2023 IN THE MATTER OF IN THE MATTER OF SPEEDPANEL AUSTRALIA LIMITED ACN 107 723 240 BETWEEN: ENDLESS SOLAR CORPORATION LIMITED ACN 122 708 061 Plaintiff

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION First Defendant IN THE INTERLOCUTORY APPLICATION: BETWEEN: NATHAN JOSEPH (NICK) SCHEUER Applicant AND: ENDLESS SOLAR CORPORATION LIMITED ACN 122 708 061 First Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Second Respondent

PRICEWATERHOUSECOOPERS Interested party

THE TRUSTEE FOR BROWN PRACTICE TRUST & ORS (TRADING AS KCL LAW) Interested party

JEREMY GOLDMAN Interested party

PETER BERNHARDT Interested party

order made by: O'BRYAN J DATE OF ORDER: 27 OCTOBER 2023

THE COURT ORDERS THAT:

1. The Applicant's interlocutory application dated 14 April 2023 seeking an order setting aside the orders made by Judicial Registrar Luxton on 2 March 2023 be dismissed.
2. Subject to order 3, each party and interested party is to bear their own costs.
3. Within 7 days of the date of this order, any party or interested party may apply to vary order 2 of these orders by filing and serving a submission of no more than 2 pages.
4. If a party or interested party files and serves a submission pursuant to order 3, within a further 7 days any party or interested party affected by the submission may file and serve a submission in response of no more than 2 pages.
5. Any application to vary order 2 will be determined on the papers.
6. The proceeding be listed for further case management, together with proceeding VID 187 of 2023, at 9.30 am on 3 November 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 The background to this proceeding is set out in Endless Solar Corporation Limited v Australian Securities and Investments Commission, in the matter of Speedpanel Australia Ltd [2023] FCA 720 (Endless Solar No 1). These reasons assume familiarity with that judgment and will avoid repetition as far as possible. The following is an abbreviated summary of the background taken from Endless Solar No 1. 2 On 19 June 2022, Speedpanel Australia Ltd ACN 107 723 240 (SPA) was deregistered by the Australian Securities and Investments Commission (ASIC) pursuant to s 601AB of the Corporations Act 2001 (Cth) (Act), which empowers ASIC to deregister a company in certain circumstances including, relevantly, where a company fails to lodge documents required to be lodged under the Act or to pay certain fees. At the time of deregistration, SPA had no directors. 3 On 28 February 2023, the plaintiff (Endless Solar) filed an originating process in this proceeding seeking an order under s 601AH(2)(a)(i) of the Act that ASIC reinstate the registration of SPA. It is not in dispute that Endless Solar was a shareholder of SPA at the date of its deregistration. Other than joining ASIC to the proceeding, Endless Solar did not notify any other person of its application. ASIC indicated that it did not oppose the application and did not appear at the hearing of the application. 4 Mr David Craig is a director of Endless Solar. Mr Craig appears to be the person responsible for causing Endless Solar to bring the application for reinstatement. 5 The application for reinstatement was heard by Judicial Registrar Luxton on 2 March 2023. Judicial Registrar Luxton granted the application and ordered ASIC to reinstate the registration of SPA pursuant to s 601AH(2) (the Reinstatement Order). 6 Following the reinstatement of the registration of SPA, Endless Solar filed two writs in the Supreme Court of Victoria on 6 March 2023 and 17 March 2023 respectively. The writs name numerous defendants including SPA, its related entities Speedpanel (Vic.) Pty Ltd (In Liquidation) and Speedpanel Corporate Services Pty Ltd (In Liquidation), the former directors of SPA (Mr Nathan Joseph (Nick) Scheuer, Dr Jerzy (George) Muchnicki and Mr Peter Bernhardt), legal advisers formerly engaged by SPA (the firm KCL Law and one of its partners, Jeremy Goldman), and the former auditors to SPA (PricewaterhouseCoopers), amongst others. The writs filed in the Supreme Court of Victoria are yet to be served. 7 Having learned of the reinstatement, Mr Scheuer, one of the former directors of SPA, filed an application seeking the review of the reinstatement orders pursuant to ss 35A(5) and (6) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). Mr Scheuer seeks an order setting aside the Reinstatement Order made by Judicial Registrar Luxton and an order that this proceeding (seeking reinstatement) be dismissed. The review is in the nature of a rehearing de novo: Harris v Caladine (1991) 172 CLR 84; Bechara v Bates (2021) 286 FCR 166 at [17]. These reasons concern Mr Scheuer's application for review. 8 I conducted a hearing of Mr Scheuer's review application on 26 May 2023 (the first hearing), and delivered judgment (in Endless Solar No 1) on 30 June 2023. In that judgment, I found that Endless Solar had failed to afford procedural fairness to all persons who may be affected by its application for reinstatement of SPA, by failing to give all such persons due notice of the application. I concluded that, in the circumstances, the appropriate course was to require Endless Solar to give such notice of its application to all persons named as defendants to the Supreme Court writs that have been filed and afford those persons an opportunity to be heard on this application. The further hearing and determination of Mr Scheuer's application was adjourned until after those steps had been taken. 9 Subsequently, the following persons and entities notified the Court that they opposed the reinstatement of the registration of SPA and wished to be heard on the application for review: (a) the Trustee for Brown Practice Trust & Others (trading as KCL Law) and Jeremy Goldman, former legal advisers to SPA; (b) Peter Bernhardt, a former director of SPA; (c) PricewaterhouseCoopers (PwC), the former auditor of SPA; and (d) Speedpanel Holdings Pty Ltd (ACN 620 898 197). 10 On 28 July 2023, I made an order pursuant to r 2.13(1) of the Federal Court (Corporations) Rules 2000 (Cth) that the above persons are granted leave to be heard in the proceeding as interested parties. 11 At the time that Mr Goldman was acting as a legal adviser to SPA, he worked at the firm Kliger Partners which subsequently changed its trading name to KCL Law. 12 I conducted a further hearing of Mr Scheuer's review application on 13 September 2023 (the second hearing). Each of Mr Scheuer, Mr Bernhardt, KCL Law and Mr Goldman (who were jointly represented), and PwC appeared at that hearing. However, at the commencement of the hearing, PwC withdrew its opposition to the reinstatement of the registration of SPA on the basis that Endless Solar did not rely on any potential claim by SPA against PwC in support of the reinstatement and neither party would seek costs against the other. PwC's position became that it neither consented to nor opposed the reinstatement and it was excused from the hearing. 13 At the second hearing, the following supplementary evidence was adduced and written submissions relied upon: (a) Mr Bernhardt relied upon an affidavit affirmed by him on 11 August 2023 and a written submission dated 25 August 2023; (b) KCL Law and Mr Goldman relied upon an affidavit affirmed by Mr Goldman on 11 August 2023 and a written submission dated 25 August 2023; and (c) Endless Solar relied upon an affidavit affirmed by Mr Craig on 18 August 2023 and an affidavit affirmed by David Visser on 18 August 2023, as well as a written submission dated 1 September 2023. 14 There was no cross-examination of any of the deponents. 15 For the reasons that follow, I find that the statutory conditions to making an order under s 601AH(2) of the Act that ASIC reinstate the registration of SPA have been satisfied, namely that: (a) the application has been made by a person aggrieved by the deregistration, being Endless Solar, which is a former shareholder of SPA; and (b) I am satisfied that it is just that SPA's registration be reinstated, and that an order for reinstatement should be made. I therefore dismiss Mr Scheuer's application for review of the Reinstatement Order.

Relevant factual background 16 The relevant facts concerning SPA, its administration and subsequent deregistration, which were established by the evidence at the first hearing, were set in Endless Solar No 1 at [15]-[31]. The key events are as follows: (a) SPA's business comprised products for the construction of walls, using lightweight panels which could be filled with a concrete inner core. (e) In 2016, SPA and its related companies were facing financial difficulties. Mr Scheuer had supplied personal guarantees to SPA's lender, National Australia Bank Limited (NAB), which exposure was at times up to $20 million. (f) On 21 March 2017, administrators were appointed to SPA and two of its related companies, Speedpanel (Vic.) Pty Ltd and Speedpanel Corporate Services Pty Ltd. (g) The administrator's report dated 29 August 2017 set out the shareholdings of SPA based on "unverified records of the Company". The report indicated that the shares held by Mr Scheuer in his personal capacity and as trustee of the Asher & Wald Trust comprised 11,654,707 shares (being approximately 23% of the issued capital) and shares held by Endless Solar comprised 636,338 shares (being approximately 1.3% of the issued capital). (h) The administrators' report dated 29 August 2017 also recorded that, as at the date of the report, NAB was owed $16,506,488 by the group of companies. (i) On 9 October 2017, the administrators of SPA exercised their powers pursuant to s 442A of the Act to remove two directors of the company, Mr Steve Happell and Mr Visser. (j) On 10 October 2017, a deed of company arrangement (DOCA) for SPA and its related companies, which had been proposed by Mr Scheuer, was executed, after receiving approval from creditors. Under the terms of the DOCA, amongst other things: (i) all assets and employees of SPA and the two related companies were, in effect, transferred to two new companies controlled by Mr Scheuer and owned by parties associated with him, being Speedpanel Systems Pty Ltd and Speedpanel Holdings Pty Ltd (cl 7); (ii) Mr Scheuer paid to the DOCA administrators a "Contribution Sum" of $3,000,000 (cl 1, 5.1) and a "Proponent Adjustment Amount" (comprising payments in respect of wages, employee entitlements, rent and outgoings) (cl 1, 6.1(a)); (iii) Mr Scheuer paid to NAB a "NAB Debt Reduction Payment" of $500,000 (cl 1, 6.1(b)); and (iv) a "Deed Fund", including the "Contribution Sum", "Proponent Adjustment Amount" and other amounts, was established to meet the claims of other creditors (cl 9). (k) On 29 March 2019, the DOCA was wholly effectuated. The Deed Administration ended and SPA returned to the control of its directors. At that time, the directors of SPA were Mr Scheuer, Mr Bernhardt and Dr Muchnicki. (l) On 3 June 2020, Mr Scheuer and Dr Muchnicki resigned as directors of SPA. Mr Bernhardt resigned on 2 July 2020. The directors were not replaced. From 3 July 2020, there were no directors of SPA. SPA no longer had any business or assets. (m) On 19 June 2022, SPA was deregistered by ASIC pursuant to s 601AB of the Act. 17 It becomes relevant to note that, according to ASIC records, SPA's directors in the period from 2016 to 2020 were as follows: (a) Mr Scheuer from 2004 until 3 June 2020; (b) Mr Bernhardt from 2010 until 2 July 2020; (c) Dr Muchnicki from 2014 until 3 June 2020; (d) Mr Visser from 2004 until 9 October 2017; (e) Mr Happell from 31 January 2017 until 9 October 2017; and (f) Mr Ronald Lazarovits from 31 December 2015 until 7 March 2017. 18 Each of Messrs Visser, Happell and Bernhardt had executive roles with SPA. Mr Visser was Managing Director, Mr Happell was a General Manager and Mr Bernhardt was a Technical Manager (responsible for product development and manufacturing, research, and development, and developing and maintaining SPA's IT systems). 19 As discussed in Endless Solar No 1 (at [33]), at the first hearing Mr Craig deposed that Endless Solar sought reinstatement of SPA in its capacity as a shareholder of SPA at the time of deregistration because Endless Solar wished to bring a claim for oppression against SPA. Mr Craig deposed that: he believed that SPA had valuable property in the form of claims for breach of duty against certain of its former directors and service providers, including Mr Scheuer, and that Endless Solar wished to bring a derivative proceeding on behalf of SPA against those persons. Mr Craig also deposed that Endless Solar's claim against SPA and SPA's claims against certain former directors and service providers was supported by documentary evidence (including, but not limited to, a bundle of documents adduced in evidence) and testimony which Mr Craig proposed to give. The bundle of documents included, amongst other things: company searches for various companies, documents relating to the administration of SPA (including the administrators' report to creditors), correspondence between former directors of SPA and PwC, documents relating to the resignation of the directors of SPA and a copy of the Constitution of SPA. 20 In Endless Solar No 1 (at [34]), I concluded that the evidence adduced by Endless Solar at the first hearing was wholly insufficient to establish that Endless Solar has any viable claim against SPA. Mr Craig's belief was unsupported by any relevant evidence. Endless Solar sought to rectify that deficiency by its supplementary evidence adduced for the second hearing, principally through the affidavit of Mr Visser. 21 At the second hearing, Mr Visser deposed to the following matters: (a) Mr Visser was the Managing Director of SPA from about 2000 until he was removed as a director by SPA's administrators on about 9 October 2017, immediately before the sale of SPA's business under the DOCA. Mr Visser was the inventor of the technology which underpinned the fire and acoustic rated building products manufactured and supplied by SPA. (b) Prior to the appointment of administrators in March 2017, SPA was a technology company which manufactured and supplied fire and acoustic rated building panel products throughout Australia, and licensed its products for sale in New Zealand, using proprietary technology developed over a 20-year period. (c) By 2016, SPA was undergoing a period of transition. At this time, it was growing fast, and was anticipating international expansion and a possible initial public offering of shares. It had experienced significant sales growth, with approximately $8.4 million sales revenue in FY13, $13.8 million in FY14 and $19 million in FY15. SPA purchased land in Bayswater and fitted out an existing factory on that site to manufacture its proprietary building panel products. It incurred significant one-off costs associated with a temporary manufacturing process split across two locations. It also pursued overseas opportunities, including by spending more than $1.29 million in R&D expenditure and a proposed agreement with the Worthington Armstrong Venture (WAVE) - a joint venture between two publicly listed US companies, Worthington Industries and Armstrong World Industries - for WAVE to import and separately license and produce SPA's products in the US. (d) On about 26 August 2016, SPA's newly acquired land was being upgraded and was valued at the amount of $12.3 million "as is" and $13.15 million "as if complete" in an independent valuation prepared by Knight Frank Valuers for NAB. In September 2016, plant and equipment was valued in-situ in the SPA factory at the amount of about $8.9 million in an independent valuation prepared by Slattery Asset Advisory for NAB. (e) In around September 2016, a Chinese consortium called DCF Properties offered to invest $8 million in SPA in exchange for 20% of the company's equity on a valuation of "not less than $40 million and ... not more than $55 million". In addition to the proposed equity investment, the DCF offer also contemplated the licensing of SPA's products for sale in Asia, and the establishment of a joint venture company to pursue that opportunity. The offer was subject to due diligence investigations. Mr Scheuer objected to the DCF offer. In emails sent in mid-September 2016, Mr Scheuer stated that the business was worth more than $50 million and up to $100 million. Mr Scheuer and SPA's CFO, Andrew Hornibrook, took charge of supplying the necessary due diligence information to DCF's representative, Warren Galgut of Pitcher Partners. The process did not go well and DCF complained of not being able to access information necessary to complete the process. By December 2016, the due diligence process had ended and the investment opportunity did not proceed. (f) On or about 7 December 2016, Mr Visser attended a meeting with NAB, together with Messrs Happell and Hornibrook. NAB agreed to provide SPA with $1.5 million in short term funding and agreed to consider increasing that amount to $3.5 million (and extending the life of the facility) subject to completion of an independent review of the company's financial position. McGrathNicol was subsequently appointed to conduct the independent review in early January 2017. (g) In the period from about December 2016, Mr Scheuer began claiming that SPA's financial position was distressed and that the company was insolvent. Mr Visser said that Mr Scheuer's behaviour occupied a great deal of the Board's attention from this time until the administrators were appointed. His actions were a distraction and had the effect of destabilising the SPA Board and its relationships with shareholders, creditors, suppliers, and customers. Mr Visser said that, while trading conditions in the market for building products were tough at this time and SPA was experiencing some short-term financial pressure by reason of its growth strategy, he believed Mr Scheuer's claims to be ridiculous, especially given his assessment of SPA's value less than three months before and his "disdain" for the DCF offer and the money it would have provided. Mr Visser came to believe that the true purpose of Mr Scheuer's conduct was to scare off potential investors, complicate the NAB independent review process and distress SPA, so that he could make a further equity investment of sufficient size to take a controlling equity stake on the cheapest and best terms possible for him. (h) At 1.26 pm on 3 January 2017, Mr Scheuer sent an email to Mr Lazarovits, copying Messrs Visser, Muchnicki and Bernhardt, stating that Messrs Scheuer, Bernhardt and Muchnicki had met and agreed to form an interim management committee (comprising Messrs Scheuer, Bernhardt, Muchnicki, Visser and Hornibrook) that would replace the Managing Director position. Mr Visser did not receive any notice of the meeting (and the email suggests that Mr Lazarovits also did not attend). (i) By reason of Mr Scheuer's behaviour, at 2.07 pm on 3 January 2017, Mr Visser sent an email to the Board calling for an extraordinary general meeting of the shareholders of SPA to vote on vacating all director positions and conducting a new election of directors. The extraordinary general meeting was postponed on a number of occasions and was ultimately held on 20 March 2017. (j) At 8.23 am on 4 January 2017, Mr Scheuer sent an email to Mr Happell, copying Mr Goldman (a lawyer at Kliger Partners, which became KCL Law), Dr Muchnicki and Mr Bernhardt, stating that Mr Visser's "tenure with SPA had been terminated", that Mr Visser was "currently trespassing on the property", and that unless Mr Visser left "immediately we will have no option but to call police". (k) On 5 January 2017, Mr Goldman gave advice to Messrs Scheuer, Muchnicki and Bernhardt concerning the proposed resolutions to be put at the extraordinary general meeting. (l) On 10 January 2017, Mr Scheuer sent an email to Mr Hornibrook asking him to delay the NAB independent review. (m) Mr Visser lost confidence in Mr Hornibrook (believing that he was meeting secretly with Mr Scheuer) and terminated his employment with SPA on 24 February 2017. (n) On 2 March 2017, NAB expressed concern about the lack of information that SPA had provided to McGrathNicol for the independent review (which had been the responsibility of Mr Hornibrook). (o) On 7 March 2017, Mr Scheuer sent an email to PwC asserting that the SPA Board had agreed that Mr Visser was not to be involved with any further discussions with PwC and that any correspondence from Messrs Visser and Happell was to be disregarded. (p) On the morning of Sunday 19 March 2017, Mr Visser and Mr Happell signed a term sheet and option agreement for licensing and distribution of SPA products in the USA with WAVE (WAVE Agreements). Representatives of WAVE were due to fly to Melbourne the following day to begin the final due diligence process contemplated by the WAVE Agreements. On 20 March 2017, Mr Visser received an email from WAVE's general counsel stating that, late on 19 March 2017, Mr Goldman (in the presence of Mr Scheuer and Dr Muchnicki) had telephoned WAVE's CEO stating that SPA wanted to make changes to the WAVE Agreements. (q) Also, during the evening of Sunday, 19 March 2017, Mr Scheuer sent an email to SPA shareholders stating that the Board had received an offer from Mr Scheuer (or his nominated entity) to subscribe for 28,079,551 shares in SPA at a total price of $1.25 million ($0.0445 per share) on or before 30 March 2017. The email referred to the rights of shareholders to participate in such an offer on a pro rata basis, but asserted that the funds were needed urgently as "the company will be trading insolvently". The email required shareholders to accept the offer by contacting Mr Scheuer by 2.00 pm the following day, 20 March 2017, or otherwise sign a document waiving their pre-emptive rights and return the document to Mr Scheuer "as soon as possible". The email also asserted that if Mr Scheuer did not hear from a shareholder by 2.00 pm on 20 March 2017, the "Board of Directors will deem this offer to shareholders to be declined and proceed to issue the shares is [sic] favour of Nathan Scheuer (and/or his nominated entity)". The email purported to be authorised by Mr Visser and Mr Happell, as well as the other directors. (r) The extraordinary general meeting was held on 20 March 2017. Mr Visser deposed that proxies already submitted were voted and SPA's shareholders passed a resolution removing Mr Scheuer and Dr Muchnicki as directors. Mr Happell sent an email to shareholders (including to Mr Scheuer and Dr Muchnicki) following the meeting advising the results. The email also called a meeting of the directors. Mr Happell also sent notification to SPA's lawyer, Mr Goldman, SPA's auditors, PwC, and to NAB. (s) During the afternoon of 20 March 2017, Mr Scheuer, Dr Muchnicki and Mr Bernhardt met at the offices of SPA's accountants and purported to resolve that: (v) Mr Scheuer and Dr Muchnicki be reappointed as directors of SPA; (vi) Mr Visser be removed as a director of Speedpanel (Vic) Pty Ltd and Speedpanel Corporate Services Pty Ltd, Mr Happell be removed as secretary of those companies, and Mr Scheuer and Dr Muchnicki be appointed as directors of those companies; and (vii) administrators be appointed to each of SPA, Speedpanel (Vic) Pty Ltd and Speedpanel Corporate Services Pty Ltd. (n) In late March 2017, Mr Hornibrook was re-appointed by the administrators as CFO of SPA. (o) In the 5-month period of the administration, from March 2017 until October 2017, the administrators were able to trade SPA's business at a profit, notwithstanding the increased administrative costs of the administration process. 22 Three observations can be made about the evidence of Mr Visser. First, the evidence raises questions about possible corporate misconduct on the part of Mr Scheuer. In so far as the evidence concerns KCL Law (and specifically Mr Goldman) and Mr Bernhardt, the evidence has far less strength. Second, the evidence principally concerns conduct and events that occurred prior to the appointment of the administrators (on 21 March 2017), although those events also cast the administration in a potentially adverse light. Third, the evidence indicates that Mr Visser, and I infer Mr Craig, had knowledge of the alleged misconduct (at least with respect to Mr Scheuer) at the time it occurred. This is not a case in which misconduct has only recently come to light. 23 Neither Mr Scheuer nor Mr Bernhardt adduced any additional evidence at the second hearing that was responsive to the evidence of Mr Visser. 24 Mr Goldman deposed that, in the period from July 2014 to around March 2017, Kliger Partners (which, as noted above, changed its trading name to KCL Law) acted for SPA on a range of matters and received instructions from many representatives of SPA including Messrs Scheuer, Happell, Visser, Muchnicki and Bernhardt, each of whom were directors of SPA. Mr Goldman further deposed that: (a) In early 2017, it became difficult to obtain instructions from SPA due to what he perceived to be dysfunction at board level. (b) On 20 March 2017 at 9.54 am, he was copied to an email from Mr Happell which stated, amongst other things, that an extraordinary general meeting of SPA shareholders had taken place at 9.00 am that day and that Mr Scheuer and Dr Muchnicki had been notified that they were no longer directors of SPA. (c) On 20 March 2017 at 10.01 am, he received an email from Mr Happell, which directed him not to have any further contact with either of Mr Scheuer or Dr Muchnicki in relation to SPA or its related companies, and not to take any instructions from Mr Bernhardt, who remained a director. (d) On 20 March 2017 at 2.51 pm, he sent an email to each of Mr Visser, Mr Happell, Dr Muchnicki, Mr Scheuer and Mr Bernhardt, stating, amongst other things, that it was clear that the KCL Law could not act for either SPA or any of its directors in relation to matters related to SPA until the matter (being the contest around the Board composition) was resolved. (e) On 20 March 2017 at 3.20 pm, Mr Happell sent Mr Goldman an email asking him to confirm that he would not act for Mr Scheuer as an individual during the period of instability and if he would take direction from two directors of SPA, given that the Board of SPA consisted of three directors in total. (f) On 20 March 2017 at 6.55 pm, Mr Goldman sent an email to Mr Happell stating that until the issues at SPA Board level were resolved, KCL Law would not act for Mr Scheuer individually in relation to any SPA related matter and that KCL Law did not believe it could continue to act for SPA. (g) KCL Law did not act for SPA after 20 March 2017. 25 Mr Visser's evidence begs the question of why no action was taken to redress the alleged misconduct at the time it occurred or in the ensuing years. Mr Craig's supplementary evidence was principally directed to the question of delay in seeking redress. Mr Craig deposed to the following matters: (a) At the time administrators were appointed to SPA and its subsidiaries on about 21 March 2017, his expectation was that the administration would be short-lived and would result in the return of SPA to the control of its directors. At the time of the administration, Mr Craig was prepared to await the conclusion of that process and felt confident that, even if the results of the 20 March 2017 shareholders' meeting needed to be confirmed or the resolutions to remove Mr Scheuer and Dr Muchnicki put to shareholders again, it was just a matter of time before that could occur. (b) In mid-2017, when the administrators indicated that they would consider a sale process for SPA's business, Mr Craig assisted Mr Happell and Mr Visser to source potential buyers for the administrators. Almost all potential buyers that Mr Craig helped introduce to SPA's administrators reported having difficulty in extracting timely information from the administrators that was necessary to progress their interest. For that reason, Mr Craig did not think that the proposed sale process was a particularly serious attempt to sell the business and he still expected control to eventually be returned to the directors. (c) The period in which Mr Scheuer's DOCA was proposed and accepted was a period of great stress for Mr Craig (although Mr Craig provided no evidence as to the cause of that stress). Mr Craig's recollection is having been in something like a state of shock and he is not sure that he knew at the time that there was anything that could be done once the administrators had accepted the offer, had recommended to creditors that they accept it as an alternative to liquidation, and once the resolution had been voted on and passed. (d) Mr Craig contacted Victoria Police about the events and, between 2018 and 2020, a police investigation occurred. Mr Craig refrained from taking legal action during the investigation. Mr Craig was then informed that the matter had been referred to ASIC, but heard nothing further. (e) Between 2020 and 2021, Mr Craig was isolated at home by reason of the COVID-19 pandemic (Mr Craig was 72 years old at the onset of the pandemic). (f) As the pandemic subsided in 2022, Mr Craig and Mr Happell began the process of engaging with law firms in relation to the matter. Mr Craig said that he was aware of the 6-year limitation period and was focussed on that date (which I infer is a reference to the date of the appointment of administrators). Mr Craig first became aware of the deregistration of SPA in "mid-late" 2022 as part of the process of discussions with law firms.

Further submissions opposing reinstatement 26 At the second hearing, Mr Scheuer principally relied on submissions advanced at the first hearing, which were outlined in Endless Solar No 1 at [50]-[55]. Additionally, Mr Scheuer submitted that Endless Solar's evidence in support of reinstatement had the following deficiencies: (a) First, Endless Solar's evidence did not address how the Supreme Court proceedings filed by Endless Solar would be funded and specifically Endless Solar's capacity to fund the proceedings. Although Endless Solar's evidence and submissions also contemplate that it intends to pursue a derivative action in the name of SPA against some or all of the defendants to the Supreme Court proceedings, there is no explanation of how that action would be prosecuted or funded. Mr Scheuer submitted that these deficiencies undermined the utility of the Supreme Court proceedings and therefore the reinstatement of SPA. (b) Second, Endless Solar's evidence did not address the fact that SPA currently has no directors and the manner in which it proposed to overcome that problem. (c) Third, the evidence adduced at the first hearing showed that, upon reinstatement, there would be uncertainty in the shareholdings in SPA. In circumstances where any proceeding brought against SPA for oppression or in the name of SPA for wrongs done to the company could only be for the benefit of shareholders generally, uncertainty with respect to the shareholdings undermines the utility of the proceedings and therefore the reinstatement. Further, the available information indicates that a majority of the shares in SPA are held by two of the defendants to the proposed Supreme Court proceedings, Mr Scheuer and Dr Muchnicki, such that they would be the principal beneficiaries of any return from the proceedings. Conversely, Endless Solar which has filed the Supreme Court proceedings, has a relatively minor shareholding. 27 The submissions advanced by KCL Law and Mr Goldman were similar in nature to those advanced by Mr Scheuer. Additionally, KCL Law and Mr Goldman submitted that, in so far as Endless Solar sought reinstatement in order to pursue claims against them (via a derivative action), reinstatement would be futile because the claims will be statute barred. The matters relied on by Endless Solar relate to events that occurred between January and March 2017. The evidence shows that KCL Law and Mr Goldman ceased providing legal services to SPA and the directors by 20 March 2023 and, further, SPA was placed in voluntary administration on 21 March 2023. The Supreme Court proceedings issued during March 2023 are brought against SPA for oppression; there has been no application to bring a derivative action. It is now too late to bring such a proceeding. 28 Mr Bernhardt adopted the submissions made by Mr Scheuer. Additionally, Mr Bernhardt submitted that Endless Solar had failed to explain adequately the significant delay in making the application for reinstatement and pursuing the proposed Supreme Court claims. Mr Bernhardt argued that Mr Craig was at all times both aware of, and took issue with, the conduct which is now the subject of the principal allegations in the Supreme Court proceedings. Mr Bernhardt argued that there would be substantial prejudice in having to defend proceedings that are brought so long after the relevant events occurred. Mr Bernardt also submitted that the basis of any claim against him is unclear, as Mr Bernhardt does not hold any economic interest in the Speedpanel companies that acquired the business from SPA.

Relevant principles 29 Section 601AH(2) of the Act empowers the Court to make an order that ASIC reinstate the registration of a company if two conditions are satisfied: (a) first, the application is made by "a person aggrieved by the deregistration" or a former liquidator of the company; and (b) second, the Court is satisfied that it is just that the company's registration be reinstated. 30 In Endless Solar No 1, I summarised the principles concerning those two conditions as follows (at [48] and [49]): 48 The expression "person aggrieved" is not defined in the Act. However, it is an expression of wide import and should be construed liberally. It includes a person who has been deprived of something, or injured or damaged in the legal sense, such as a person who has some right of potential value that has been extinguished (including a right to bring a claim against the company, and potentially a claim by the company against a third party): Hinz, in the matter of KEAD Pty Ltd (Deregistered) v KEAD Pty Ltd (Deregistered) [2022] FCA 270; 158 ACSR 444 (Hinz) at [19] (Halley J) (and the cases cited therein). The threshold for a plaintiff to establish that they are an aggrieved person is low and can be dealt with in a summary way. Provided that the claims advanced by the person alleging a grievance are not hopeless or bound to fail, that person will be an aggrieved person for the purpose of s 601AH(2)(a). Any further analysis is unnecessary: Boys, in the matter of 38 Akuna Pty Ltd (Deregistered) v Australian Securities and Investments Commission [2019] FCA 320 at [24] (Lee J); Re Brockweir Pty Ltd [2012] VSC 225 (Re Brockweir) at [22] (Sifris J). 49 The requirement that the Court be satisfied that the reinstatement is "just" confers a broad discretion on the Court. Factors relevant to the exercise of that discretion include the circumstances in which the company was deregistered, the purpose in seeking its reinstatement, whether any person is likely to be prejudiced by reinstatement, and the public interest generally: see Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; 98 ACSR 124 (Re ERB) at [5] (Brereton J) and the authorities there cited. The applicant for reinstatement bears the onus of establishing that the reinstatement is just: Re ERB at [10]. 31 Those statements of principle were not in dispute between the parties. 32 There was some disagreement, however, about the extent to which the Court should assess the merits of the claim proposed to be brought by Endless Solar against SPA following reinstatement. 33 On the one hand, Mr Scheuer relied on authorities which confirm that, on an application for reinstatement, the applicant bears the onus of showing that there is a viable cause of action against, or to be brought by, the deregistered company. For example, in du Boulay v Worrell [2008] QSC 174, Chesterman J said (at [37]): An applicant for the reinstatement of a deregistered company must satisfy the Court that the reinstatement is just. In a case such as the present where reinstatement is sought for the sole purpose of allowing the company to prosecute proceedings it is incumbent upon the applicant to demonstrate convincingly that there is an arguable cause of action which is likely to produce something of value to the company. … 34 In that case, Chesterman J concluded that the pleading was "legally unintelligible" and that the applicant had not shown that any good would come from reinstating the company to allow it to prosecute its proposed action (at [37]-[38]). 35 On the other hand, Endless Solar relied on authorities which indicate that, apart from clear cases, a question whether a proposed proceeding is an abuse of process or doomed to fail should not be determined on a reinstatement application but by the court in which the proceeding is proposed to be commenced. In that regard, Endless Solar relied on the principles stated by the Victorian Court of Appeal in AMP General Insurance Ltd v Victorian WorkCover Authority (2006) 15 VR 175 (AMP). In that case, AMP argued that reinstatement was not just because of the delay in seeking reinstatement for the purpose of bringing a proposed claim against AMP. The primary judge made an order for reinstatement notwithstanding the delay. In dismissing an appeal from that order, the Court of Appeal stated the following principles (at [43]-[46]): 43 As the judge below noted, no argument was advanced by AMP that the authority's claim against the company was doomed to fail, such that reinstatement was futile. Rather, its argument was that the lapse of time meant that it was inevitable that no fair trial could be had, such that it could not possibly be "just" to reinstate the company. 44 Were it possible to say with certainty even before the company was joined to the proceeding that a fair trial was impossible, then it might be that the only conclusion reasonably open was that reinstatement was not just. But it would be a rare case where a conclusion of that kind could be reached with confidence before the proceeding had even begun. 45 In our view, it will almost always be the appropriate course for the question of prejudice to a party to a proceeding to be assessed by the judge (or master) who has the management of that proceeding. Moreover, that assessment can really only be made after joinder of issue in the proceeding, at which point the court can ascertain precisely what is in contest between the parties, who the witnesses will be, and how much reliance is to be placed on oral evidence on the one hand and documentary evidence on the other. 46 The forum of an application for reinstatement of a company is singularly inappropriate for such an investigation. The order for reinstatement is, in effect, purely administrative, albeit made in the exercise of a discretionary power. In all but the rare case to which we have referred, it is not for the court dealing with the reinstatement question to deal with, and weigh up, the various considerations bearing upon abuse of process/want of prosecution. As already noted, that assessment involves examining not only the risk of prejudice to the defendant but the plaintiff's explanation for the delay. 36 Those principles were followed by Brereton J in Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; 98 ACSR 124. After referring to the principles stated in AMP, his Honour concluded (at [13]): It will be a very rare case that merely reinstating a company will be prejudicial to a potential defendant. That potential defendant still has available all the remedies of summary dismissal and stay in the substantive proceedings, if they are instituted. All he or she is deprived of is the opportunity to prevent the proceedings even being instituted - an issue on which a defendant usually has no say. In my view, a court should not, on a reinstatement application, conclude that reinstatement would be unjust on account of considerations analogous to abuse of process or want of prosecution unless affirmatively satisfied that a fair trial could not be had, or that the proposed proceedings were doomed to fail. Consistently with what the Victorian Court of Appeal said, such questions can usually only been addressed once the cause of action has been formulated and pleaded and the issues defined, and are best examined by the court in which the substantive proceedings are conducted. 37 I do not consider that there is any conflict in the authorities referred to by Mr Scheuer and Endless Solar respectively. It is appropriate for the Court to consider whether the proceedings proposed to be brought by Endless Solar have utility and can be expected to produce something of value. However, the Court should be cautious about pre-judging the likely success of the proceedings, particularly on the basis of principles such as abuse of process and the application of limitation periods, other than in the clearest cases. 38 Finally, it is important to emphasise that the assessment of what is "just" must have regard to the facts and circumstances of the case being decided. Each of the cases referred to above turn upon their own facts. As observed by the Victorian Court of Appeal in AMP (at [27]), the decision to order reinstatement is properly characterised as a discretionary decision of the kind described in Norbis v Norbis (1986) 161 CLR 513 and the Court must consider and weigh all of the relevant considerations. As discussed in Norbis v Norbis, judicial statements concerning the considerations that ought to be taken into account and the principles to be applied in exercising a discretionary power are to be understood as judicial guidance and not binding rules that constrain the exercise of the discretion (see Mason and Deane JJ at 519, Wilson and Dawson JJ at 533-534, and Brennan J at 536).

Consideration 39 The first question to determine is whether Endless Solar is a person aggrieved by the deregistration of SPA. As noted above, the expression "person aggrieved" is of wide import and should be construed liberally. It includes a person who has been deprived of something or injured or damaged in the legal sense by reason of the deregistration. It follows that a person's status as a former director or shareholder of a deregistered company is not sufficient to establish that the person is aggrieved by deregistration. A shareholder may be able to satisfy the Court that they are a person aggrieved merely by demonstrating that they will benefit from reinstatement through sharing assets or a dividend: Yeo v Australian Securities and Investments Commission, in the matter of Ji Woo International Education Centre Pty Ltd (deregistered) [2017] FCA 1480 at [14]-[22] (Gleeson J). However, if the deregistered company was insolvent, a shareholder is not a person aggrieved by deregistration because their interest in the company has no value and there is no prospect of a dividend: Melluish v Underwood Development Pty Ltd [2004] NSWSC 429 at [6] (Barrett J). 40 In the present case, Endless Solar relies on the fact that it has a cause of action against SPA. It can be accepted that, to the extent that the asserted cause of action is not hopeless or bound to fail, Endless Solar is an aggrieved person for the purpose of s 601AH(2)(a). 41 As discussed in Endless Solar No 1 (at [34]), the evidence originally adduced by Endless Solar on the application for reinstatement was wholly insufficient to establish that Endless Solar has any viable claim against SPA. If the position had remained the same at the second hearing, I would have refused an order for reinstatement on that basis. At the second hearing, however, Endless Solar supplemented its evidence by the affidavit of Mr Visser. Endless Solar submitted, and I accept, that Mr Visser's affidavit establishes an arguable case that Mr Scheuer breached his duties as a director of SPA by failing to act in the best interests of SPA and by actively preferring his interests in amassing control of SPA at the expense of SPA's interests. Endless Solar relies on the following claims which I consider have some basis in the evidence: (a) Mr Scheuer resisted and interfered in the proposed equity investment of some $8 million in SPA by DCF Properties in September to December 2016; (b) in January 2017, Mr Scheuer attempted to have Mr Hornibrook delay the McGrathNicol independent review which was a pre-requisite to NAB providing further financial accommodation of up to $3.5 million to SPA; (c) Mr Scheuer made an offer to subscribe for shares in SPA under conditions that unilaterally purported to take away shareholder rights and arguably misrepresented Board support for the proposal; (d) Mr Scheuer interfered in the finalisation of the WAVE Agreements that would have delivered an additional source of funds for the SPA group; and (e) after Mr Scheuer and Dr Muchnicki were removed as directors of SPA at an extraordinary general meeting of the members of SPA, Mr Scheuer, Dr Muchnicki and Mr Bernhardt purported to reinstate Mr Scheuer and Dr Muchnicki as directors and to appoint administrators to SPA immediately thereafter. 42 Ultimately, Mr Scheuer was able to acquire the business conducted by SPA from the appointed administrators pursuant to the DOCA which was executed on 10 October 2017. 43 I consider that the evidence adduced by Endless Solar establishes arguable claims in oppression and breach of directors' duties, particularly on the part of Mr Scheuer. Subject to applicable limitation periods, it may be possible for Endless Solar to bring a derivative proceeding on the part of SPA against Mr Scheuer. 44 Mr Scheuer and the other interested persons on this application strongly criticised the form of the two Supreme Court writs that have been filed by Endless Solar. They argued that the claims as advanced in those writs were bound to fail. As discussed in Endless Solar No 1, the claims advanced by Endless Solar in the two Supreme Court writs are wide-ranging, complex and confusing (at [40] and [43]). The writs intermingle claims for relief on the part of Endless Solar on the basis of oppression under s 233 of the Act with claims for relief on behalf of SPA under s 233 as well as claims based on other causes of action. The two writs contain a web of claims that is very difficult to untangle. 45 I consider that it is unnecessary, on this application, for the Court to rule on the legal efficacy of the two Supreme Court writs. The questions before the Court on this application are whether the Court is satisfied that Endless Solar has a viable claim against SPA such that it is a person aggrieved by the deregistration and reinstatement of SPA would be just. On the basis of the evidence that has been adduced, I am so satisfied. The question of the legal efficacy of the two Supreme Court writs is properly a matter that should be considered by the Supreme Court of Victoria. After the writs have been served, the defendants to those writs will be able to raise the alleged deficiencies in the Supreme Court proceedings, and the Supreme Court will be best placed to determine whether the writs in their present form require amendment or, indeed, should be struck out. 46 The second question that must be determined is whether it is just that SPA's registration be reinstated. The fact that Endless Solar has arguable claims in oppression and breach of directors' duties, particularly on the part of Mr Scheuer, is a factor of considerable weight. All other things being equal, it would be just to reinstate the registration of SPA to allow such claims to be pursued. However, two opposing factors must also be weighed. 47 First, there has been lengthy delay on the part of Endless Solar in taking steps to pursue its asserted claims. I accept, as submitted by Mr Scheuer and the other interested parties, that the delay in bringing the Supreme Court proceedings has the potential to affect adversely their defence of the claims. As observed by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551 (citations omitted): … The enactment of time limitations has been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates". Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo, "what has been forgotten can rarely be shown". So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now "knowing" that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose. 48 The explanation for the delay proffered by Mr Craig on behalf of Endless Solar is unsatisfactory. Mr Craig does not deny that he was aware of all the events and actions that he now claims constituted misconduct on the part of Mr Scheuer and others. Despite that, Endless Solar took no action to restrain the alleged misconduct. It is only this year, with the pending expiry of limitation periods, that he decided to act. I consider that the delay by Endless Solar in bringing proceedings will increase the costs in the ensuing litigation and generally diminish the quality of justice able to be achieved by the court. This is a matter that weighs significantly against reinstatement. 49 Second, legitimate questions have been raised about the cost of the proposed proceedings and the overall value of the proceedings, none of which have been properly answered by Endless Solar. Proceedings of the kind contemplated by Endless Solar are notoriously expensive, usually involving many hundreds of thousands of dollars and sometimes more. Any damages would be payable to SPA, in which Endless Solar has a minor share of approximately 1.3%. On the evidence presently before the Court, it is difficult to envisage a circumstance in which Endless Solar's share of any damages that were to be awarded would exceed the costs of the proceedings. Endless Solar has not adduced any evidence about the funding of the proposed litigation, including its ability to meet an order for security for costs or to provide funding for any derivative action that might be brought. Endless Solar submitted that the Court should infer that funding is available to it because of the manner in which it has brought the application for reinstatement and defended the present application that has been brought by Mr Scheuer. I am certainly prepared to infer that Endless Solar has funds available for the present proceeding, but that is the extent of the inference that I am prepared to draw. 50 The question whether it is just that SPA's registration be reinstated is finely balanced. Ultimately, I consider that the interests of justice favour reinstatement to enable Endless Solar to attempt to pursue the claims that are the subject of its evidence in this proceeding. I am greatly troubled by the foreseeable hurdles and difficulties facing the pursuit of those claims by Endless Solar, including the unsatisfactory nature of the current Supreme Court writs, the problems of proof that are likely to arise by reason of delay, and the unanswered questions associated with the funding for the claims. Despite that, the Supreme Court will be in a better position than me to determine whether, in what manner, and to what extent the proposed claims should be permitted to proceed. 51 The above conclusion has been reached on the basis of the claims that Endless Solar has asserted as against Mr Scheuer. As stated earlier, the evidence adduced by Endless Solar established an arguable case against Mr Scheuer. I have not placed any significant weight on the claims that Endless Solar has asserted against other proposed defendants. On the evidence before me at present, those claims appear to be speculative. The question of reinstatement depends, though, on Endless Solar establishing that it has an arguable claim against SPA, which in this case is founded upon arguable claims against Mr Scheuer. That is a sufficient basis to conclude that reinstatement is just.

Conclusion 52 For the reasons given above, I have reached the same conclusion as Judicial Registrar Luxton that an order should be made under s 601AH(2) that ASIC reinstate the registration of SPA. In those circumstances, the appropriate order to be made is an order dismissing Mr Scheuer's application which sought an order setting aside the Reinstatement Order made by Judicial Registrar Luxton. The Reinstatement Order will continue in effect. 53 Two further matters should be addressed. 54 The first concerns the costs of Mr Scheuer's application for review. On the evidence presently before me, I consider that the appropriate order is for each party and each interested party to bear their own costs of this proceeding to date. In reaching that conclusion, I have taken into account the following matters: (a) The application for reinstatement of SPA was initiated by Endless Solar. In large part, the application was necessitated by reason of Endless Solar's delay in seeking to assert claims against SPA. SPA was deregistered because it no longer owned assets or conducted a business and the remaining directors subsequently resigned. I do not consider that any fault should be attributed to the former directors by reason of their decision to resign at the time that that decision was taken. (b) Endless Solar's original application for reinstatement before Judicial Registrar Luxton failed to give notice of the application to persons whose interests may be affected by the application, being the proposed defendants to the Supreme Court proceedings. Endless Solar's original application also failed to adduce evidence substantiating its claims for relief against SPA, being the basis of its application for reinstatement. (c) In those circumstances, it was reasonable for Mr Scheuer to bring his application seeking a review of the Reinstatement Order made by Judicial Registrar Luxton. At the initial hearing of Mr Scheuer's application for review (which is the subject of my reasons in Endless Solar No 1), I found that Endless Solar had failed to afford procedural fairness to all persons who may be affected by its application for reinstatement, by failing to give all such persons due notice of the application. It was necessary to adjourn the hearing of the application for review until Endless Solar had given notice of its application to all persons named as defendants to the Supreme Court writs. At that hearing, I also found that the evidence adduced by Endless Solar on the application was wholly insufficient to establish that Endless Solar has any viable claim against SPA. Thus, the deficiencies in Endless Solar's application necessitated the subsequent hearing which is the subject of these reasons. (d) On this subsequent hearing of Mr Scheuer's application for review, Endless Solar has been successful. 55 Balancing the above matters, I consider that it is just that each party and each interested party bear their own costs of this proceeding to date. That order reflects the fact that, whilst Endless Solar has been successful as to the ultimate outcome, its conduct of the application has caused unnecessary costs to Mr Scheuer and the intervening parties. 56 While the above conclusion has been reached on the basis of the evidence presently before me, it is possible that there are factors of which I am presently unaware that would affect the discretion as to costs. I will therefore make orders allowing any party or interested party to apply to vary the costs order by filing a short submission. 57 The second matter concerns the consequential orders that should now be made with respect to the appointment of directors to SPA. On 2 March 2023, Judicial Registrar Luxton made the following order: If, by 31 March 2023, no directors are appointed to the Company, the plaintiff file and serve by 14 April 2023 an interlocutory process seeking orders that: (a) a meeting of the Company's members be called pursuant to s 249G of the Act, or on some other basis, for the purpose of considering any proposed resolution concerning the appointment of directors; or (b) the Company be wound up. 58 On 11 April 2023, I set aside that order pending the review of the Reinstatement Order. It is now necessary to address the means by which directors will be appointed to SPA. As discussed in Endless Solar No 1 (at [7]), that issue is also related to the issues raised by proceeding VID 187 of 2023 which was commenced by Mr Scheuer against Endless Solar and which is being case managed with this proceeding. I will therefore list this proceeding together with the related proceeding VID 187 of 2023 for the purpose of further case management, and particularly the making of any necessary orders relating to the appointment of directors to SPA. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan.